The "One Big Beautiful Bill" and Its Potential Impact on Privately Held Middle-Market M&A

Guiding Founders and Owners of Privately Held Middle-Market Companies to Strategic Exits with Integrity

For founders and owners of privately held companies in sectors like aerospace, manufacturing, B2B software, logistics, and essential services, understanding the ripple effects of significant legislative changes on your exit strategy, tax exposure, and deal structure is paramount. The recently introduced "One Big Beautiful Bill Act" (OBBBA) represents a rare, sweeping piece of legislation that, despite its broad title, could significantly energize the lower-middle to middle-market M&A landscape for privately held businesses.

Let's delve into how this bill might reshape the deal environment for privately held middle-market companies over the next 6 to 24 months.

Key Provisions Driving M&A Activity for Privately Held Firms

The One Big Beautiful Bill Act is a comprehensive reconciliation package addressing reforms across taxation, healthcare, energy policy, and government spending. While much public discourse will focus on its political dimensions, several key business and tax provisions are poised to directly influence your privately held company's exit calculus.

Here’s what matters most for founder-led and family-owned businesses:

1. Permanent Extension of the 20% Qualified Business Income (QBI) Deduction (§110005)

Originally a cornerstone of the 2017 Tax Cuts and Jobs Act (TCJA), the QBI deduction provides a substantial benefit for pass-through entities – a common structure for many privately held businesses. The OBBBA not only extends this deduction but also makes it permanent. This directly translates to increased after-tax profits and improved cash flow, making your privately held company's EBITDA (and thus, its valuation) more attractive to prospective buyers.

• Implication for Sellers: Robust seller EBITDA positions will command higher valuation multiples. If you are considering a full exit in the next 1–2 years from your privately held company, this is an opportune moment to optimize your financials to leverage the full benefit of this extension.

2. Enhanced Bonus Depreciation for Capital-Intensive Privately Held Firms (§111001)

For asset-intensive businesses—like manufacturers, FBOs (Fixed Base Operators), and equipment providers—the bill extends 100% bonus depreciation through at least 2027. This allows buyers to immediately write off substantial portions of the purchase price allocated to equipment or capital improvements, a significant advantage when acquiring privately held companies with substantial tangible assets.

• Implication for Deal Structure: Previously, less appealing asset sales may now offer highly favorable tax treatment for buyers without unduly penalizing sellers. We anticipate increased deal flow and greater flexibility in transaction structuring for privately held businesses.

3. Strategic Reassessment Due to Clean Energy Credit Adjustments (§112001–§112015)

The proposed repeal or phase-out of multiple green energy tax credits could recalibrate deal flow in sectors such as industrial technology, EV infrastructure, and energy-efficiency service providers.

• Implication for Valuation: If your privately held company has historically benefited from these credits, buyers may conduct a re-evaluation of long-term earnings projections. Conversely, privately held businesses in established or non-green niches might find themselves in a more competitive position relative to these shifts.

4. Revitalized and Expanded Opportunity Zones (§111102)

The OBBBA reintroduces and strengthens Opportunity Zone incentives, with a particular focus on rural and secondary markets. For privately held businesses located in these designated zones, the updated regulations could attract renewed investor interest.

• Implication for Rural Operators: M&A interest may increasingly gravitate towards underserved regions, bringing welcome liquidity and new buyer pools to founders of privately held companies who were previously off the conventional M&A radar.

What We Expect to See in the Privately Held Middle-Market

With extended tax relief and increased capital gains certainty (for the foreseeable future), buyers, including sophisticated family offices and private equity firms, are demonstrating an accelerated pace in deal pursuits for privately held assets. The team at Axio Bridge anticipates the following trends:

• A surge in founder exits from privately held companies in 2025–2026, as owners strategically capitalize on these tailwinds before the inevitable return of political and regulatory uncertainty.

• A renewed interest from strategic buyers, many of whom had paused transactions amid recent interest rate fluctuations and tax policy volatility, is now looking more actively at privately held acquisition targets.

• Valuation premiums for sellers of privately held companies in high-demand sectors like aerospace, B2B technology, and essential services, particularly for businesses demonstrating recurring revenue and meticulously prepared financial records.

Your Strategic Next Steps as a Privately Held Company Owner

If your privately held company's EBITDA falls within the $5M to $25M range and you are contemplating retirement or a strategic pivot, this legislative window presents a compelling opportunity.

At Axio Bridge, we specialize in conducting discreet, founder-centric M&A processes that prioritize preserving your legacy and maximizing your financial outcome. Our approach is not about rushing you into a sale; it's about meticulously preparing your privately held business, strategically attracting the most suitable buyers, and empowering you with control throughout the entire transaction.

Disclosure:

This blog post is provided for general informational purposes only and does not constitute legal, tax, or financial advice. All references to legislation are based on publicly available information from the proposed “One Big Beautiful Bill Act” as of July 2025 and are subject to change. Business owners are strongly encouraged to consult with their financial advisor, attorney, or tax professional before making any transaction or planning decisions.